There's Plenty Of Upside Left In This Surging Small-Cap Stock

I'm not dour or unfriendly by any means, but most consider my
interests and passions uninteresting at best and mind-numbingly
boring at worst. Rather than keeping up with the Kardashians or
Kanye West, I prefer to read magazines like The Economist, Forbes
and Institutional Investor. I also attend investing seminars,
conferences and other business-oriented events instead of college
football games. I generally try to avoid situations and events
that don't strike my fancy.

But I was recently roped into a fundraising party for a local
politico. Joining a conversation with several environmentalist
types gave me an investment idea that's more powerful and
relevant than I have gleaned in a very long time from my
traditional sources.

The environmentalists were discussing how computers have
actually increased the global use of paper. Back in the 1980s,
computers were lauded for their potential to create a paperless
office. But the truth is, global paper consumption has increased
by 50% since the '80s. Each year, the average American uses the
equivalent of nearly six 40-foot trees in paper form, according
to The Economist.

My environmentalist friends were upset about these facts as
the hope of a paperless society continues to fade. This led me to
think about the increasing demand and steadily escalating
pressure on the supply, which makes the paper business sounds
like a lucrative investing opportunity.

As soon as I returned home, I ran technical scans on publicly
traded paper companies. One company's stock performance and
fundamental picture was absolutely stunning. So with a nod to the
environmentalists who inadvertently inspired this capitalist,
here's a close look at this nearly perfect company.

This paper company has been tearing higher this month. Take a
look at the chart below.

The powerful technical picture is what first sparked my
interest in the company. The stock has surged from the $31 range
to nearly $39 in just the month of July. That's a stunning
uptrend in anyone's book. However, as of July 26, the price has
fallen back from the high. This potentially sets up a solid
buying opportunity.

The company, which has a market cap of more than $500 million,
is broken into two segments, fine paper and technical products.
Its products are sold globally in more than 70 nations with its
revenue split close to even between the two operating segments.
The technical segment makes goods such as oil and air filters,
specialty tape, medical packaging, wallpaper and other similar
paper products. The fine paper division makes premium writing
paper, invitations, bright paper and other types of
commercial-printing paper.

Fueling the advance, Neenah recently purchased premium
business paper brands from Southworth. Sold in major business
supply stores, these brands provide Neenah another established
avenue for distribution. In addition, the company just signed a
strategic partnership with Gruppo Cordenons, an Italian maker of
fine paper. This deal will allow Neenah to market and distribute
Cordenons' products in the United States and Canada. It's a
win-win situation for both firms as Neenah will profit from
another successful product line and Cordenons will gain
additional exposure for its high-end paper.

Neenah Paper is broken into two segments: fine paper
and technical products.

In its most recent quarter, Neenah's revenue increased 8% from
the same period last year, to $213 million. Growth in the fine
paper segment and increased sales volume from the newly acquired
brands is credited with the improved results.

The company also recently increased its quarterly dividend to
20 cents a share from 15 cents, representing a 33% increase. This
increase comes after a hike of 25% during the first quarter. With
the increase, the company is now yielding about 2.1%
annually.

Perhaps more exciting for investors, Neenah has recently
announced a $10 million stock repurchase program. It plans on
buying back its stock over the next 52-week period. This plan
replaces the previous plan in which the company purchased around
$4 million of shares during the preceding 12 months. There is no
set schedule for the buybacks, and the program may be
discontinued at anytime. However, despite this caveat, with only
slightly less than 16 million shares outstanding, this buyback
has the potential of being a powerful upside catalyst.

Risks to Consider:
Despite Neenah appearing very strong across multiple metrics,
anything can happen in the financial markets. Always be certain
to use stop-loss orders, diversification and position size based
on your capital levels and investment goals.

Action to Take -->
I love this stock on a breakout close above $39. However, a
breakdown to the $37 level will also attract my buying interest.
An initial stop level at $36 and a 12-month target price of $50
is a solid forecast.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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